Highly-awaited list­ing of port as­sets start­ing to stir in­vestor in­ter­est

New Straits Times - - Business - AMIR HISYAM RASID KUALA LUMPUR bt@me­di­

MMC Corp Bhd’s share price, which has gained nearly 20 per cent in the past year, is poised to rise fur­ther ahead of the planned list­ing of its port as­sets.

The highly-awaited list­ing, which could raise as much as RM3.08 bil­lion, is start­ing to ex­cite in­vestors as an­a­lysts be­lieve MMC Corp is un­der­val­ued de­spite its po­ten­tial of mor­ph­ing into the largest port op­er­a­tor in the re­gion.

MMC Corp man­ag­ing di­rec­tor Datuk Seri Che Khalib Mo­hamad Noh said the ini­tial pub­lic of­fer­ing (IPO) could ma­te­ri­alise as soon as next year af­ter the last piece of puz­zle was com­pleted — which was get­ting the first earn­ings from the ports’ con­sol­i­da­tion, in­clud­ing its 100 per cen­towned Pe­nang Port.

“Now that the ac­qui­si­tion of Pe­nang Port is com­pleted, we need at least a year or two to start har­ness­ing the con­sol­i­da­tion profit and value cre­ation from putting all these ports to­gether.

“We have started the re­or­gan­i­sa­tion of the ports. We are hir­ing new peo­ple and we have a new man­age­ment. In fact, we are cen­tral­is­ing some of the func­tions,” he said af­ter MMC Corp share­hold­ers’ meet­ing, here, yes­ter­day.

An­a­lysts said MMC’s “port­fo­lio” of five port as­sets, namely Pe­nang Port, North­port, Johor Port, Port of Tan­jung Pelepas and Me­laka Port, could drive big­ger earn­ings.

An analyst said Pe­nang Port was the third-largest port in Malaysia by vol­ume, and at­trib­uted its growth to the ro­bust elec­tron­ics and elec­tri­cal ex­ports and con­sump­tion growth for im­ports.

MMC Corp’s ports and lo­gis­tics busi­ness (ex­clud­ing Pe­nang Port) cur­rently con­trib­utes about 60 per cent to the group’s rev­enue.

Jupiter Re­search di­rec­tor Nazarry Rosli said MMC Corp would be stronger fun­da­men­tally with the first earn­ings con­tri­bu­tion from Pe­nang Port, which was the main point of its eq­uity story for its IPO of port as­sets.

“MMC Corp has strong earn­ings up­side, par­tic­u­larly next year, once Pe­nang Port’s good fi­nan­cial per­for­mance pushes its earn­ings for­ward, and should other ports sus­tain their per­for­mances. Its share price also has fur­ther up­side po­ten­tial to re­flect this fun­da­men­tal,” he told NST Busi­ness.

In­vestors could ex­pect higher-than-av­er­age pre­mium from the po­ten­tial IPO, he added.

Nazarry and other an­a­lysts be­lieve MMC Corp is trad­ing be­low its true value, which makes “buy” an at­trac­tive op­tion de­spite al­ready big gains in the last 12 months.

MIDF Re­search has a rel­a­tively high tar­get price of RM2.98 on MMC Corp, while RHB In­vest­ment Bank has the high­est among all at RM3.50.

The stock has a to­tal re­turn of 18.22 per cent in the last 12 months, 189 per cent higher than the pre­ced­ing pe­riod.

MMC Corp closed 0.4 per cent higher to RM2.53 from RM2.52 on Tues­day.

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